| 1031 Exchange
An exchange which is officially called an Internal Revenue Code 1031 Exchange which allows an owner to trade one like property for another under very specific guidelines and defer paying income tax.
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ARM
Adjustable Rate Mortgage.- A mortgage loan that bears interest at a rate that is subject to change and therefore adjustable during the term of the loan on a basis that has been pre or otherwise determined.
Acceleration clause-( Due on Sale Clause)
A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to another individual without informing the lender.
Acknowledgment of a deed
A form of authenticating instruments conveying property or otherwise conferring rights whereby a public declaration is made via the signature of the grantor(s) which serve as evidence as being his or her intentional act or deed.
Acquisition
The act or process by which a person obtains ownership of or an interest in property
Act of God
An unpreventable destructive event resulting from natural world forces.
Actual depreciation
The depreciation that has occurred as a result of physical, functional or economic forces and have caused a loss in the value of a building.
Affidavit of title
A written statement made by a grantor under oath and acknowledged before a notary public which identifies the grantor and his or her marital status and certifies that since the date of the title examination there have been no known judgments, bankruptcies or divorces, no unrecorded deeds, contracts, unpaid repairs or improvements or defects of title and that the grantor is in possession of the property.
Agreement of sale
A written agreement or contract between a buyere and a seller in which they reach a "meeting of minds" whereby the purchaser agrees to buy specific real estate and the seller agrees to sell upon specific terms and conditions set forth in the contract.
All-inclusive mortgage
A purchase money mortgage that is subordinate to, but also including, the original loan.
All Inclusive Trust Deed (AITD, Wrap around Mortgage)
Financing arrangement in which an existing mortgage is refinanced, and additional money loaned at an interest rate between the rate charged on the old loan and current market rates. The lender, who agrees to pass through part of the loan payments to the original mortgage lender, combines or wraps the remainder of the old loan with the new loan, and the borrower makes one monthly payment. Wraparound loans generally earn a higher yield for the lender than new mortgage loans because the wraparound lender advances only the difference between the unpaid first mortgage and the combined principal of the two loans, but the wraparound rate is computed on the borrower's total debt. A wraparound mortgage is an alternative to refinancing the entire loan when a borrower needs additional funds.
Amortization
The gradual elimination of a liability, such as a mortgage through regular payments over a specified period of time which must be sufficient to cover both the principal and the interest.
Annual Percentage Rate
(APR) The identified cost of credit as determined in accordance with Regulation Z and the Federal Truth in Lending Act.
Application
The form used to apply for a mortgage loan, containing information about a borrower's income, savings, assets, debts, and more.
Appraised value
An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales, and the most recent sale is the one on the property in question, the appraisal usually comes out at the purchase price.
Appreciation
The increase in value of property over a time period.
Arm's length transaction
A transaction such as a sale of property in which all parties involved are acting in their own best-interest and are under no undue influence or pressure to act from any other parties.
Arrears
1. A payment made at the end of a term. 2. Sometimes used to signify default or a payment overdue.
Articles of incorporation
A written instrument that identify the fundamental ways a corporation will operate.
Artisan's lien- (Contractors Lien)
A lien given under common law to one skilled in some kind of mechanical craft or art as a protection that he or she will be paid the agreed upon charges for his or her work.
As is
1. In real estate, a sale without any guarantees as to condition and where the premises are being accepted by a buyer or tenant as they are including any physical defects. Illegal in many states. 2. A sale made with only the disclosure of latent defects. See Caveat emptor.
Asbestos
A carcogenic mineral previously used as insulation due to its great heat insulating qualties but now illegal.
Asking price
The price that an owner would like to receive which is also called list or listing price.
Assessment
The official valuation placed on property for ad valorem taxation or public improvements.
Assign
The transfer of one party's property contractual rights under leases, mortgages and trust deeds or contract rights to another.
Assignee
The one to whom a property or interests in a property have been transferred. Also know as Assigns.
Assignment
A written transfer from one party to another of an estate, or right therein, or of the contractual rights of possession and use, or in action.
Assignment of lease
The transfer of the rights privileges of an assignor who remains liable unless released by the landlord to an assignee who acquires the same rights to use the leased property.
Assignment of rents
A mortgage clause under which the lender may upon the default by the borrower take possession of the property, collect its income and apply it to the loan balance and the costs incurred by the beneficiary.
Assignor
A person who assigns or transfers property.
Assumable loan
A mortgage loan without due-on-sale clause that allows an owner to sell property to a purchaser who is permitted under the loan documents to undertake the obligation of the loan with no change in loan terms. Most FHA and VA loans are assumable.
Assumption
The taking over of the primary liability for the payment of an existing mortgage or trust deed loan.
Assumption agreement
The adoption or taking on a debt or contractual obligation primarily resting upon another party.
Assumption clause
A buyer takes over an existing loan obligation and agrees to be fully liable for its repayment.
Assumption fee
A charge by a lender for changing over and processing new records for a new owner who is assuming an existing loan.
Assumption of loan
A purchase of property wherein the grantee accepts liability for the payment of the existing note secured by a mortgage or trust deed against the property and becomes a co-guarantor with the seller for the payment of the loan unless the lender releases the seller.
Attorney-in-fact
A party who has been authorized by a principal under a power of attorney to perform a certain limited specific act or general acts. See Power of attorney.
Auction
A public sale of property to the highest bidder
Auction with reserve
An offer by a seller to sell property but where the seller keeps or holds the right to establish a minimum opening bid, to accept or reject bids and to withdraw the property at any time before the completion of the auction.
Audit
An finnancial inspection done by a CPA or other qualified person of the books, records and procedures used by a business or individual.
B
Backup offer
A real estate purchase contract that only becomes effective if the current contract cannot close.
Balloon payment
An installment payment on a promissory note usually the final one for discharging the debt which is significantly larger than the other installment payments provided under the terms of the promissory note.
Bargain and sale deed
A deed that conveys title to real property but does not guarantee clear title that is often used by court officials and fiduciaries who are only holding title by force of law. See Grant deed, Quitclaim deed and Warranty deed.
Bedroom community
A suburban community in which a large number of workers from a major city live.
Betterment
An improvement to property which increases the value of the property which is considered to be a capital asset rather than repairs or replacements where the original character or cost remains unchanged.
Bill of sale
A written instrument which evidences the transfer of title to personal property from the vendor, seller, to the vendee, buyer.
Binder
A written agreement to consider the down payment for the purchase of real estate as evidence of good faith on the part of the purchaser.
Blanket mortgage or trust dee
A loan that covers two or more properties and often an entire subdivision where those properties are pledged or conveyed as security for the debt and which permits the borrower to obtain a partial reconveyance when a parcel is sold and to be released from the lien upon payment of a previously agreed-upon amount.
Bleeding a project
In new construction, overstating expenses and fees so as to divert a larger than normal amount of the project costs to the developer's profit. In managing existing real estate so as to obtain the highest possible current income from it, to the extent that many normal operating expenses are not made which usually results in the rapid deterioration and loss of property value.
Blockbusting
An illegal practice of unscrupulous people of inducing an abnormally high turnover or panic selling of homes at prices below market value by exploiting the prejudices of home owners in neighborhoods where the ethnic make-up is or appears to be on the verge of changing.
Built-ins
The features constructed as part of the house such as cabinets, etc.
Buying subject to
Phrase meaning no personal liability is assumed in regard to a mortgage debt which exists against real estate at the time of purchase.
Buyout
An arrangement by an owner of a building agreeing to take on the liability for the remaining lease term of a tenant in a different building which releases the tenant from the old lease obligation and permits him/her to negotiate a lease in the owner's building. |
